If we learned anything about Pete during the LOTR trilogy, it was that he (and co.) can write a good story. While I love the LOTR book, I think the films present a better story, mostly because it combines parts of other Tolkein writings. Pete left out much from the LOTR, but nothing was left out in the end; lines from deleted characters were given to others, etc, and so much was added in from other Tolkein sources. I adore the LOTR trilogy and consider myself part of the fellowship thanks, in no small part, to the "making of" sequences in the extended additions. I trust Pete to do the job well.

As for The Hobbit, my desire has always been to have Bilbo (Holm) narrate the story, beginning with him (before the LOTR) telling his tale to a young Frodo, and perhaps Sam and others as well. Perhaps Holm was simply unable to do so, and as a result the idea of Frodo telling the tale came to pass. The timing is tricky, to be sure, but I think we can trust Pete to get it right. Pete has always maintained that he wants The Hobbit to be able to stand on it's own, and I think it will. Don't you remember how painstakingly Pete went through the trilogy, making sure it made sense, that the story flowed? Don't you recall how some ideas were tried before Pete realized it wouldn't work that way, so they tried something else? Remember Arwen at Helms Deep? There were countless ideas that, in the end, didn't pass muster with Pete (and co.), and I'm sure if the Frodo idea doesn't pan out, Pete will change it.

To me, the best idea (knowing so little of Pete's thinking) would be to have Frodo reading the newly finished book in Rivendale. Then the line that "our journey didn't turn out like Bilbo's" or something to that effect which Frodo says to Sam in Rivendale takes on new meaning. Or, perhaps it will just be Elijah Wood narrating the film (as Frodo or not); those who have not seen the LOTR certainly wouldn't know any better. In the end, it's all conjecture. Many would have (and probably did) moaned and groaned about the "murder" (lol) of Tom Bombadil (sp?) in the LOTR; but in the end, all was well, and all was great, and we have a film(s) for the ages. Let me repeat, I trust Pete!